Re Rules of the Supreme Court 1971 (WA); Ex Parte Kingsfield Holdings Pty Ltd - [2021] WASC 16

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION:   RE RULES OF THE SUPREME COURT 1971 (WA); EX PARTE KINGSFIELD HOLDINGS PTY LTD [2021] WASC 16
CORAM:   LE MIERE J
HEARD:   14 JANUARY 2021
DELIVERED          :   28 JANUARY 2021
FILE NO/S:   CIV 2270 of 2020
MATTER:   An application under the Rules of the Supreme Court 1971 (WA) seeking leave to file and issue a writ of summons

EX PARTE
KINGSFIELD HOLDINGS PTY LTD
First Plaintiff
JEFFREY STEWART LEE
Second Plaintiff

Catchwords:

Practice and procedure - Ex parte application for leave to file and issue a writ of summons pursuant to the Rules of the Supreme Court 1971 (WA) O 67 r 5 - Whether writ an abuse of process or frivolous or vexatious - Whether claim is unsustainable or has no reasonable prospect of success - Application granted

Legislation:

Rules of the Supreme Court 1971 (WA)

Result:

Leave to file writ of summons granted

Category: B

Representation:

Counsel:

First Plaintiff	:	Mr T O Coyle & Mr J S Lee
Second Plaintiff	:	Mr T O Coyle & Mr J S Lee

Solicitors:

First Plaintiff	:	Bayview Legal
Second Plaintiff	:	Bayview Legal

Case(s) referred to in decision(s):

Clone Pty Ltd v Players Ltd (In Liquidation) (Receivers and Managers Appointed) (2018) 264 CLR 165
Wentworth v Rogers (No 5) (1986) 6 NSWLR 534

LE MIERE J:

Summary

On 31 December 2020 the applicants presented a writ of summons for filing. By letter of 6 January 2021, an acting registrar informed the applicants that the writ appeared to be an abuse of the process of the court or a frivolous or vexatious proceeding, and was rejected for filing.
The applicants applied to a judge pursuant to O 67 r 5(3) of the Rules of the Supreme Court 1971 (WA) for leave to file the writ.
On 14 January 2021 I gave the applicants leave to file the writ. These are my reasons for doing so.

Nature of applicants' claim

The indorsement of claim on the proposed writ sets out only the claim for relief. However, the nature of the plaintiff's claim is disclosed by the applicants' proposed statement of claim dated 4 January 2021.
The second applicant, Mr Lee, is the sole director of the first applicant, Kingsfield Holdings Pty Ltd. Kingsfield carried on business as Quokka Joe's Café on premises on Rottnest Island. On 23 January 2012 officers of the Department of Health, which is the proposed seventh defendant, conducted a routine food safety inspection of the café. During the inspection, one of the officers pointed out some minor non-compliances with statutory standards.
On 31 January 2012 Mr Duffield, the proposed second defendant, wrote a letter on the letterhead of Sullivan Commercial Pty Ltd, the proposed first defendant, to Kingsfield. A copy was sent to the Rottnest Island Authority, which is the proposed sixth defendant. Sullivan Commercial was the property management agent for Rottnest Island Authority. The letter said, amongst other things, that Sullivan Commercial had been advised that the café has been closed following a health inspection of the premises last week (the Closure Information). The applicants made enquiries to ascertain the source of the Closure Information. The applicants claim that representations were made to them by or on behalf of some of the defendants to the effect that Mr Rutherford, the proposed third defendant, had provided the Closure Information to Mr Duffield.
The applicants commenced actions in this court for defamation as follows:
(1)CIV 1106 of 2013, in which Kingsfield claimed damages against Mr Rutherford for words spoken by Mr Rutherford to Mr Duffield (the First Action);
(2)CIV 1146 of 2013, in which Kingsfield claimed damages against Mr Rutherford and Sullivan Commercial in respect of the copy of the letter of 31 January 2012 sent to the Rottnest Island Authority (the Second Action); and
(3)CIV 1147 of 2013, in which Mr Lee claimed damages against Mr Rutherford and Sullivan Commercial in respect of the copy of the letter of 31 January 2012 sent to the Rottnest Island Authority (the Third Action).
On 23 March 2015, by the consent of the parties, the court made the following orders:
(1)in the Second Action, Kingsfield's action against Sullivan Commercial be dismissed and Kingsfield and Mr Lee pay Sullivan Commercial's costs fixed at $20,000; and
(2)in the Third Action, Mr Lee's action against Sullivan Commercial be dismissed and Mr Lee and Kingsfield pay Sullivan Commercial's costs fixed at $20,000.
(the Consent Orders)
Kingsfield's claim against Mr Rutherford in the First Action and Mr Lee's claim against Mr Rutherford in the Third Action proceeded to trial before Kenneth Martin J. In his defence, and in his evidence given at trial, Mr Rutherford admitted he spoke to Mr Duffield the words:
'Quokka Joe's Café had been closed following a health inspection of the café last week.' (the Spoken Words)
Mr Rutherford defended the action on the following bases:
(1)the Spoken Words did not identify Mr Lee;
(2)the Spoken Words were not capable of carrying the defamatory meanings alleged by the plaintiffs;
(3)the defences of common law and statutory qualified privilege; and
(4)the statutory defence of triviality.
Justice Kenneth Martin found:
(1)the Spoken Words did not identify Mr Lee;
(2)the Spoken Words did not convey the alleged defamatory meanings or any permissible variant;
(3)the defences of common law and statutory qualified privilege were not established; and
(4)the defence of triviality was not established.
Justice Kenneth Martin dismissed the actions and ordered the applicants to pay Mr Rutherford's costs (the Judgment Orders). The costs were subsequently agreed in the sum of $160,000.
In the proposed action, the applicants allege that they commenced each of the First, Second and Third Actions in reliance upon misrepresentations by or on behalf of some of the proposed defendants. The alleged misrepresentations are that Mr Rutherford spoke the Spoken Words to Mr Duffield, and that communication was the source of the Closure Information in the letter written by Mr Duffield on behalf of Sullivan Commercial to Kingsfield and copied to the Rottnest Island Authority (the Misrepresentations).
The applicants allege that Mr Rutherford did not speak the Spoken Words to Mr Duffield and that the Closure Information was provided to Mr Duffield by the fifth defendant, Mr Amaranti, the chief executive officer of the Rottnest Island Authority. The applicants allege that the Misrepresentations were made in furtherance of a conspiracy between the proposed defendants with the common design:
(1)to represent to Kingsfield and Mr Lee that Mr Rutherford conveyed the Closure Information to Sullivan Commercial, and not to disclose the involvement of the Department of Health and Mr Amaranti in the communications leading to the 31 January 2012 letter, so that Mr Amaranti and the Department would not be at risk of being sued for defamation and from other action that might be taken by Kingsfield and Mr Lee;
(2)for the sole or predominant purpose of causing detriment to Kingsfield and Mr Lee; and
(3)with the intention of injuring Kingsfield and Mr Lee.
(the Common Design)
In the proposed writ, the applicants seek the following relief:
The plaintiffs claim:
1.Against the first defendant:
1.1.orders setting aside the consent orders for judgment dated 23 March 2015 in CIV 1146 of 2013 against the first plaintiff in favour of the first defendant; and
1.2.orders setting aside the consent orders for judgment dated 23 March 2015 in CIV 1147 of 2013 against the second plaintiff in favour of the first defendant;
2.Against the third defendant:
2.1.orders setting aside the judgments after trial in CIV 1106 of 2013 and CIV 1147 of 2013 entered against the plaintiffs on 11 April 2016 in favour of the third defendant and all costs orders made against the plaintiffs in CIV 1146 of 2013 and CIV 1147 of 2013.
3.Against all defendants:
3.1.damages for fraud;
3.2.damages for conspiracy;
3.3.aggravated damages;
3.4.interest on amounts awarded as damages;
3.5.such other relief as the court considers fit; and
3.6.costs.

Procedure in case of abuse of process or frivolous or vexatious process

Order 67 r 5 of the Rules relevantly provides:
(1)If any writ, process, motion, application or commission, which is presented for filing, issue or sealing appears to the registrar to be an abuse of the process of the Court or a frivolous or vexatious proceeding, the registrar shall refuse to file or issue such writ, process, motion, application or commission without the leave of a judge or a master first had and obtained by the party seeking to file or issue it.
…
(4)Applications for leave under subrules (2) and (3) shall be made ex parte and shall be supported by affidavit.
The rule is a filter to prevent the commencement of claims which are incomprehensible, incoherent or manifestly unsustainable for the purpose of protecting the court from the unwarranted waste of its time and resources, and to avoid the loss that would otherwise be suffered by those required to defend such claims. The rule is not a device for the ex parte summary disposal of claims on the same basis that the court approaches applications to strike out pleadings or for summary judgment.
A judge should refuse leave to file or issue the writ only if satisfied that the writ would be an abuse of process or a frivolous or vexatious proceeding. A proceeding will constitute an abuse of process if it is clearly doomed to fail or plainly unsustainable. An action is frivolous when it is so obviously untenable that it cannot possibly succeed.
Ordinarily, the court considers an application for leave to file a writ in a summary way. Before refusing leave to file a writ on the ground that it is unsustainable, the court must have a high degree of certainty about the ultimate outcome of the proceeding if it were allowed to proceed in the ordinary way including the ordinary interlocutory processes before trial. The court should take into account that summary disposal of cases may inhibit developments in the law. Where a party's proposed case relies on a development of the law, the court may more readily exercise its discretion in favour of giving leave and allowing the matter to proceed in the ordinary way. Giving leave to file the writ does not preclude a defendant from applying to strike out a pleading or an indorsement on a writ on the grounds that it discloses no reasonable cause of action or is frivolous or vexatious.

The fraud and conspiracy claims

The applicants' fraud and conspiracy claims are based on the allegations that Mr Duffield and Sullivan Commercial made the Misrepresentations in the course of, and in furtherance of, an agreement to carry out the Common Design.
The fraud claims are based on the proposed defendants being joint tortfeasors involved in the Misrepresentations. Where persons take concerted actions to a common end and, in the course of executing the joint purpose, one of them commits a tort, all of them are jointly liable. The applicants' claims appear to assert each of those elements.
The tort of conspiracy may take two forms. A conspiracy to injure, which is also referred to as a lawful means conspiracy, is an agreement or combination between two or more persons to commit a lawful act with the predominant purpose of injuring or damaging a plaintiff and the act is carried out and the purpose achieved. An unlawful means conspiracy is an agreement or combination between two or more persons to commit an unlawful act with an intention to injure a plaintiff and the act is carried out and the intention achieved. The applicants' claims appear to assert the necessary elements for each form of conspiracy.
Loss or damage is an element of each tort. Further, an element of the tort of conspiracy is that the plaintiff must prove actual pecuniary or financial loss as a result of the defendants' acts done in furtherance of their agreement.
The applicants' case is that they brought the First, Second and Third Actions as a result of the Misrepresentations as a consequence of which they incurred legal costs in pursuing those actions and the payment of costs they were ordered to pay to the defendants by the court.
The applicants will need to prove that incurring the loss of paying their own costs and the defendants' costs in the First, Second and Third Actions was caused by, and is a reasonably foreseeable consequence of, the alleged conspiracy. That is not a matter to be decided on this application.
On the face of it, and without the more detailed scrutiny that the court would undertake on a strike out application or an application for summary judgment, the applicants' claims include the necessary elements to establish the torts of fraud and conspiracy. I am not satisfied that the applicants' proposed action for damages for fraud and conspiracy is an abuse of process or frivolous or vexatious.

The claim to set aside judgment and orders in the First, Second and Third Actions

There is an issue whether the applicants' claims to set aside the Judgment Orders and the Consent Orders are not sustainable or have no reasonable prospect of success.

Jurisdiction to set aside judgments tainted by fraud

The jurisdiction of the Supreme Court to set aside judgments or orders procured by fraud is well‑established. In Wentworth v Rogers No 5[1] Kirby P, with whom Hope and Samuels JJA agreed, stated a number of principles which are established by law and which govern proceedings in which a plaintiff seeks to set aside a judgment for fraud. The second principle stated by Kirby P is:
Secondly, it must be shown, by the party asserting that a judgment was procured by fraud, that there has been a new discovery of something material, in the sense that fresh facts have been found which, by themselves or in combination with previously known facts, would provide a reason for setting aside the judgment (538).
[1] Wentworth v Rogers (No 5) (1986) 6 NSWLR 534.
Later Kirby P said:
In summary, [the party impugning the judgment] must establish that the case is based on newly discovered facts; that the facts are material and such as to make it reasonably probable that the case will succeed (539).
The jurisdiction to set aside a judgment for fraud was considered by the High Court in Clone Pty Ltd v Players Ltd (In Liquidation) (Receivers and Managers Appointed).[2] In a joint judgment, the court considered the history of setting aside judgments in the Court of Chancery as this was relevant to the present power of the Supreme Court of South Australia. In the Court of Chancery, there had been two kinds of bills for setting aside judgments: the bill of review, which is now dealt with by the appeals process, and the original bill, which rescinded or annulled a decree in much narrower circumstances. The court held that the power exercised by an original bill remains part of the equitable powers of the Supreme Court of South Australia. In discussing that power, the court said:
The original bill was commonly described as limited to fraud, although there were different species of fraud to which the bill could apply. The fraud was not limited to a deceit or dishonesty by the opposing party. It extended, in the words of the Lord Chancellor of Ireland to a 'fraud on the court' such as where parties who were not hostile nevertheless presented their case to the court as antagonists in order to obtain orders depriving third parties of their rights. In exceptional circumstances it was possible that it could extend to fraud of a witness by perjury [53].
[2] Clone Pty Ltd v Players Ltd (In Liquidation) (Receivers and Managers Appointed) (2018) 264 CLR 165.
I turn then to consider the plaintiff's claims to set aside the Judgment Orders and the Consent Orders.

Judgment Orders

A judgment procured by fraud may be set aside. However, the judgment was not directly procured by fraud. The plaintiffs' case is that the conspiracy caused the plaintiffs to commence the action. However, the Misrepresentations did not procure the judgment. The action was dismissed because the court found that the words which were admitted to have been spoken by Mr Rutherford were not defamatory and did not identify Mr Lee. Those findings are not affected by the Misrepresentations or the evidence adduced at the trial. Indeed, the acts done in furtherance of the conspiracy caused Mr Rutherford to admit that he spoke the words. If that fraud had not been perpetrated, then it would have been found that he did not speak the words and the action would have been dismissed in any event.
There must be a causal connection between the alleged fraud and the judgment sought to be set aside. Usually, the fraud is in the adducing or suppressing of evidence by one party which leads to findings and judgment in favour of that party as a result of the application of the law to those findings. However, in Clone the High Court explained that the power to set aside a judgment for fraud has been extended to a 'fraud on the court' such as where parties colluded to present a false case to the court in order to obtain orders depriving third parties of their rights.
The applicants, in effect, seek to extend the circumstances in which the court will set aside a judgment for fraud. The applicants' case involves the successful party fraudulently, in furtherance of a conspiracy, causing the unsuccessful party to bring proceedings; adducing evidence in furtherance of the conspiracy; and the fraud resulting in a costs order in favour of the fraudulent party. The applicants argue that the judgment should be set aside, notwithstanding that the false evidence did not itself result in the judgment in favour of that party.
It is not appropriate to deny the applicants an opportunity to present that case to the court in the ordinary way by refusing leave to file the writ. I have found that the applicants claim for damages for fraud and conspiracy is not an abuse of process or frivolous or vexatious. The applicants may file a writ claiming such relief, including damages resulting from bringing the actions which resulted in the Judgment Orders. In those circumstances, it is not appropriate to summarily deny the applicants the opportunity to argue for the further relief claimed of setting aside Judgment Orders. Giving leave to file the writ will not result in unwarranted waste of its time and resources or loss to the prospective defendants, because the action for damages for fraud and conspiracy, including damages for the costs incurred in the First, Second and Third Actions, may proceed in any event.

The Consent Orders

Similar considerations apply to the claim to set aside the Consent Orders.

Conclusion

The applicants have leave to file the writ of summons dated 31 December 2020 and lodged at the central office on 31 December 2020.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
BR
Associate to the Honourable Justice Le Miere
28 JANUARY 2021